District Must Repay $3 Million to State : Budget: According to separate audits, Hacienda La Puente Unified received money for unapproved adult education programs.

The Hacienda La Puente Unified School District will have to return about $3 million in state funding because school officials wrongfully collected funds for adult education programs that were not approved by the state.

District officials say that of the money that must be returned to the state to amend accounting mistakes made during the 1990-91 fiscal year, $2.5 million will be siphoned from the adult education program. The remainder will be drawn from the district’s general fund, which supports kindergarten through 12th-grade classes.

The district’s money troubles with state finance officials began more than a year ago, when the district was hit with two independent reports that sharply criticized management of the adult education program. In past years, that program has served as many as 100,000 students and ranked among the largest in the state.

A state controller’s audit found that, among other things, the district inflated attendance hours, kept poor records, misspent funds, and employed non-credentialed teachers.

A subsequent report by an independent auditor hired by the school board found that district management of adult education raises “serious questions of accountability.” The report also recommended the district develop an accounting system “that clearly shows income and expenditure for each program.”

A follow-up investigation over the past year by the state Department of Education discounted some of those claims, such as that the district wrongfully used non-credentialed teachers in an apprenticeship program for firefighters. But education officials upheld the controller’s findings that the adult education program was rife with poor record-keeping and on several occasions billed the state for programs not eligible for state funding.

For instance, the district claimed nearly $1 million for classes offered by the East San Gabriel Valley Regional Occupation Program, but the state Adult Education Code prohibits the district from maintaining classes outside its jurisdiction without permission from state officials.

Peggy Peters, an audit response coordinator with the Department of Education, said district officials could have avoided most of their problems by asking more questions of state education officials.

“There wasn’t anything we found that led us to believe anyone at the district was trying to defraud us; it all seemed to be errors,” she said. “There were misunderstandings among those in the field and no one bothered to call the Department of Education to double-check anything.”

But John Kramar, the district’s assistant superintendent for business services, said the district did receive state blessing for many of the programs now being disallowed.

“Our adult education program has been aggressive, creative and carried out directly with the people at the Department of Education,” he said. “Now the state says it won’t pay for these programs because of some technical violations.”

Kramar agreed, however, that the district can do a better job of recording and filing attendance records.

The school district has yet to negotiate the terms of repayment, but state officials say it is likely the district will be allowed to pay the money back gradually, lessening the initial blow.

State finance officials arrived at the figure of roughly $3 million by calculating the amount of money they paid the district based on the average daily attendance in the courses and apprenticeship programs that have been deemed unqualified for state funding.

Because of the financial drain that the district will suffer as it pays back the state, adult classes that don’t pay for themselves, as well as career counseling and other services that aren’t supported by student fees, will be cut, Kramar said. Those funds will account for $2.5 million of the funds owed to the state.

Hacienda La Puente’s adult education program was one of several statewide that were subject to thorough audits last year when state finance officials suspected that districts may have been overcharging the state.